'Fragile recovery in market may well be starting'
FIVE years since the start of the financial crisis, Chesterton Humberts anticipates that 2013 will mark the beginning of a recovery in the UK housing sector, with average national house prices increasing by 1.7 per cent over the year, and all regions experiencing growth.
Over a five-year period, prices are forecast to rise at an average of 3 per cent per annum.
The combination of the Treasury's projected growth in the economy next year, a decrease in consumer price inflation, and plans for increased mortgage lending, helped by the Government's New Buy and Funding for Lending initiatives, is expected to boost activity in the market and provide the catalyst for the release of pent-up sales demand from forced renters and homeowners with a "wait-and-see" mindset.
However, regional variations are set to persist for some time as weak consumer confidence and affordability issues continue to affect the housing market in some areas.
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Chesterton Humberts' five-year forecast projects that growth in London, the South East, East Anglia and the South West will be more than 20 per cent compared to the national average of just over 15 per cent.
Duncan Ley, associate at Chesterton Humberts in Truro, said: "Looking ahead, the picture looks brighter, with mortgage rates likely to remain very low by historic standards and government schemes beginning to show signs of progress. Already, several property search websites have reported increased enquiries over the past two months.
"If the Treasury's predictions are correct and consumer price inflation drops below the Bank of England's target rate of 2 per cent, there should be a significant improvement in household finances and consumer confidence. "There are always regional variations, but for the first time since 2007, we expect all regions to be in positive territory next year."
Robert Bartlett, chief executive at Chesterton Humberts, said: "We have seen a welcome and significant increase in market activity right across the country in the past two months.
"Lending from the government-backed scheme has started a shift in activity, and buyer interest has certainly been kindled. The current signs are that a fragile recovery may well be starting."
Chesterton Humberts is projecting that average prices in the South West will grow by 2.2 per cent.
The status of the prime country house market is expected to remain unchanged for 2013 as a shortage of quality available stock should serve to sustain values.
If the economy picks up as expected and boosts confidence, modest growth of between 2 and 3 per cent for properties in the best locations is expected.
Elsewhere, where market conditions are tougher, prices are likely to be flat or see further slight decline.